The Next Digital Revolution in Industry: the FIWARE Perspective

"When I talk about the industrial internet it's really capturing data off of machines and throwing back into valuable insight for our customers. That's going to be worth trillions of dollars in the economy and I think it's going to transform GE. Essentially, GE captures data through sensors that are attached to the various things it manufactures, like trains. The data fundamentally is going to be modeled and turned into performance outcomes”

Jeff Immelt, GE CEO1

A new digital revolution is propagating through the Industrial sector. The Internet of Things (IoT) and cyber-physical systems combine with real-time data processing and analytics to bring insight, automation and intelligence (including learning capabilities) to a new breed of Smart factories that embody the principles of Industry 4.0. Born in the German industrial world and the world of industrial production”, Industry 4.0 promises to completely transform not only manufacturing and production facilities, but also their related business processes and supply chains. It will enable contextual interaction of applications implementing processes across the whole value chain between themselves and with physical and virtual objects, including connected people and their digital personas, through sensors and other devices.

The quote of Jeff Immelt demonstrates that US players have already integrated such a vision in their strategy.

What about Europe at the time we are launching ”Digitising European Industry”(DEI)?

1/ The third digital revolution started in Services and was centered on Business to Consumer interactions.

Digitalization is not merely an evolutionary transformation, it will bring disruption to the very heart of established business models, changing the way goods are produced and how the value of services is perceived. New technology and information driven economic model will emerge, bringing as deep a change as did the advent of electrical power in the 19th century.

Since the advent of the foundational technology driving forces of Social Media, Mobile Communications, Analytics and Cloud, it has taken less than 10 years for digitalization to become a worldwide, cross-generation, collaborative, contextual and data intensive phenomenon – And there is no sign of any slow-down in its reach or impact.

We refer to this current wave of disruptive transformation as “The Third Digital Revolution”2 although there are parallel revolutions both in the way that we represent / use information and in the computing technology that we use to process it. Focusing on Information representation:-

• The first revolution happened around 3200 years BC with the invention of cuneiform writing as a system of record keeping in Sumerian temples: a few people wrote for a few readers.

• Then the invention of the Printing Press in the 16th century allowed a few authors to be read by many people.

• Today we see the third digital revolution where ubiquitous connectivity to social networks enables us all to be Transactors, Creators and Consumers (many to many). What’s more thanks to geo-location and personalization, we leave traces and context of the transaction we engage in. The growing ubiquity of sensors (both physical and virtual) enables smart machines to truly perceive and contextualize their environments.

The explosive growth in digital transactions has highlighted the importance of data as a key resource for emerging business and economic models. Data is the “gold“ of the 21nd century. Data about who is (and was) doing what and where, i.e., contextual data, can ring valuable insights for service providers that wanted to improve personalization for the services they deliver (respecting customer intimacy). But these insights are also valuable for other providers to identify additional opportunities for products and services. This is the principle behind “Multi-Sided Markets”. The customers of one market may agree to have their data shared with service providers in return for premium service at reduced or even zero cost. These service providers are then able to identify potential new revenue streams based on exchange of data with other players in the market and help subsidize the infrastructure through which data is captured.

Systems capable of this are complex – and complexity comes at a cost and risk. This is where the value of the Digitising European Industry comes in, as the forum to bring together the actors across industries and across the value chain to work on mastering the challenges by leveraging all the know-how and existing systems together with an proactive attitude of forging ahead. Specifically for the platform layer, this will inevitably translates into opening up the service platform layer by using industry-friendly open source standard platform components. This allows new classes of innovative services, built by anyone in industry, eventually moving the value added from the platform layer to the application and market layer. FIWARE has been a vanguard for this approach and should be the starting point for any emerging DEI platform ecosystem.

Open service platforms break down the borders between systems like the DSM (Digital Single Market) initiative by the EC aims to break down boarder for creating a digital single market.

Eco-systems of markets have been established that work together to fund transaction platforms that feed this new Economy of Data across industries – for example, transport companies may work with hotels, restaurants and insurance companies to create a spectrum of services with the potential to address the end to end customer journey. Part of this vision might be the creation of transient “business moments” for travelers, by using data and analytics to leverage a deep understanding of customer preferences and their current and imminent situation / context e.g. what services can be offered to ease a consumers’ problems resulting from a late or cancelled flight.

For the most part, the digital revolution in business has up to now had its greatest impact on the way that end consumers (or citizens) engage with service providers (B-to-C). The focus has been on customer intimacy and satisfaction driven by service personalization, availability and immediacy – In this connected living world, we can consume or initiate services anytime, anywhere. But the disruption from the earthquake of the B-to-C revolution will be followed by shockwaves hitting the B-to-B world as digitalization impacts end to end supply chains. This will not only include human system interactions but will extend the data analytics domain to autonomous devices; handling distributed algorithms using a pre-defined set of business rules without necessarily requiring human intervention.

This strong B-to-B impact is anticipated to hit as a series of Digital Shockwaves over the next 5 years, as businesses are forced into radical transformations to deliver the flexibility, agility and customization demanded by their customers and their customers’ customers. This will drive new levels of automation, optimization, interconnection and even artificial intelligence that will propagate through businesses’ operational processes and out into their extended supply eco-system.

2/ The Next (Fourth) Digital Revolution will significantly disrupt Industry

The Internet of Things (IoT) and cyber-physical systems, combined with recent technologies supporting real-time context information processing and analysis at large scale, is bringing a new breed of Smart Applications in multiple sectors. Context information was already playing a key role in personalization of services during the Third Digital Revolution (see previous section). However, the Internet of Things works as a powerful mean for enriching context information as never before.The Industry sectors will be part of the next wave in this Digital Revolution, with the Industry 4.0 vision embodying many of the principles that we can expect to see:

Whilst it could be argued that some of these principles are essentially addressed by earlier revolutions in production automation, the combination and extended reach of all four require fundamental changes to many aspects of the way goods and services are designed, produced, delivered and supported. Those organizations that are unable to adapt and transform will struggle to keep pace with the ever-growing expectations of the digitally transformed consumers.

Products and processes will become more connected, generating and exchanging context data about status, usage, relevant situations and problems. This context data will be combined with further context information to give vital feedback to design and manufacturing processes, leading to a new generation of products and services. As an example, further context data may be related to customer experiences (collected through social and e-commerce networks, search engines, other applications, etc.) or context information about what is going on in the surroundings of fabrics or in the cities where products are delivered (e.g., environmental or traffic data provided by the city, retail data provided by shops, etc). The result will be shorter and more cost-efficient product manufacturing and delivery lifecycles, greater levels of innovation and more market relevance. But such levels of responsiveness demand end to end supply-chain processes that are able to interoperate at optimal efficiency if smaller production runs and more localized manufacturing and production are to deliver the necessary returns on investment. Definition of a common standard for context information management and access would be instrumental to achieve the necessary interoperability and enable portability of solutions.

Industry 4.0 principles will deliver these operational efficiencies through flexible and smart manufacturing facilities that will self-optimize, self-configure and self-correct based on available context information, to ensure more efficiency (e.g. energy consumption, output of waste) and quality improvement, yet with an increased potential for customization. Ultimately this means a shortening of time to market for new products and related services – The Automotive Industry, for instance, plans to reduce the creation of new, fully customized models from 3 to 2 years. Furthermore, with energy, transportation and inventory costs rising, the cost of manufacturing labor costs is reducing in significance, leading to an increasing tendency to move production as close as possible to the end consumer. This will have knock on benefits through faster time-to-market and shorter supply chains. Such a shift is already occurring in industries like cement production, tile making, construction materials etc.

But unlike in the B-to-C market where vendors seek exclusive customer loyalty for their products and are able to leverage direct data driven insights into their customers’ demands and behaviors, Industrial companies have more complex supply eco-systems to consider. Historically they had little means of direct access to the end customer and therefore product and service feedback loops were not very responsive.

The hyper connected vision for Industry 4.0 means that now it is possible for Industrial Companies to create shared open platforms with their major customers and partners, to bring together context data that reflects the entire end to end supply chain. This will for the first time link design, performance, usage and satisfaction information, enabling much more responsive and targeted innovation to be realized.

As an example, we can anticipate a time when such platforms will aggregate design data from Airbus, operational data from British Airports Authority and customer data from Lufthansa to help create the next generation of aircrafts and airline services. These platforms will become the foundation and enabler for further Multi-Sided Markets similar to those already at the heart of the digital revolution in B-to-C, but with a much richer eco-system potential.

The co-creation of new products and services will make heavy use of these platforms organized around shared context data while Enterprise Social Networks and other “virtual sensor data” (e-commerce, search engines, third party applications, etc.) open to the whole Eco-System will help co-operation between partners.

Just as the Economy of Data has driven much of the digital revolution in B-to-C markets, it will be even more significant in the B-to-B world since the investments required to deliver the Industry 4.0 vision will be considerable. The challenge is to extend the scope and outworking of the Economy of Data beyond customer engagements to the heart of Industrial Enterprises – So that such investments can be justified.

The inherent value of the data exchanges, made possible through collaboration networks and platforms, must be fully understood and fully exploited.

3/ Industry 4.0 describing the trends seen for the 4th industrial revolution.

The fourth industrial revolution is completing a long cycle, which illustrates a new production paradigm where highly customized products can be produced with an increased efficiency and productivity. This next generation Product Life Cycle will take the best advantage of combining: production data, usage data, customer experience data and third-party data (e.g., context data published by smart cities) generated by the whole eco-system of the company, its partners and sub-contractors, its customers and other third parties.

4/ The enabling technologies for the next Digital Revolution in Industry

The Digital Revolution in the B-to-C world has been possible because of the convergence of Cloud, Mobility, Social (and other virtual exchange networks), sensors and intelligent analytics and algorithms, enabling cloud hosted analysis of data that is collected through mobile apps and virtual sensor networks.

In combination with merging of digital and physical world, with CPS, with dynamic production networks based a seamless connectivity and the trends mentioned above an enormous impact on manufacturing will happen.

Concerted data collection (especially by the likes of Amazon, Google, Facebook, Linked-In, Alibaba, etc) has facilitated the analytics (primarily predictive) and valorization of data. Webscale Computing has given the scalability of computing, networking and storage resources that enable platforms to maintain the same architecture as their use grows from a few thousand users to millions or tens of millions of users. At the same time more localized implementations of scalable architectures will be needed to process data within specified locations to address local regulatory constraints.

But the ambitions of Industry 4.0 will demand and drive additional technology disruptions:

• Improvement of production and processes mixing product and production and merging real and virtual world.

• Processing and Analytics must move from Predictive to Prescriptive, enabling automated responses to quasi real time decisions which, depending on the nature of the change, could be actuator driven at an equipment level or could involve human operator guided interaction.

• The Internet of Objects (which is still seen as hierarchical in nature) must transform into an enabling infrastructure in which millions of smart connected objects can be allocated a role of sensor, actuator or gateway. These smart objects will be able to self-interface with each other as well as with cloud-based applications implementing operational processes and will be able to reconfigure their roles according to operational changes. The customer has the decision where deploy which functionality.

• Context Information Management requires a common standard so that multiple connected smart objects, smart applications and end users can be connected and be integrated as sources of shared context information, fueling processing and analytics. This common standard will be key to enable interoperability among players in multi-side markets as well as portability of applications/solutions. In addition, this common standard will be instrumental in reconciling the wide variety of competing sectorial standards associated to Internet of Things. Standardization of Context Information Management should capitalize on pre-standardization efforts done around the FIWARE NGSI API which is already supported by many industrial actors.

• A robust connectivity forms the backbone of a digital industry. Devices, plant and machinery must be connected as extensively and securely as possible in order to avoid disruptions and downtime costs in fully automated processes. Ubiquitous, available and reliable high speed networks are a key to enabling technology for the full realization of an ‘Industrial Internet’. So will be the capabilities associated with new generation networks such as capacity, flexibility and versatility, high speed transmission and low power consumption or differential quality of service3 , for the development of innovative connected services. Strong incentives for continued investment in the EU on broadband infrastructure will be essential to meet the exponential connectivity demands associated to an Industrial Internet.

• Security is a fundamental prerequisite for prescriptive, analytics driven, automated control – no industry can risk having its production equipment commandeered and controlled by hackers. Recent work carried out jointly with Siemens leads us to think that prescriptive analytics will be part of the solution as well as part of the problem of Security for Industry 4.0. Real time data driven analytics will allow the early detection of abnormal system behavior and security breaches; and will support quick and targeted remediation. Gathering of data for processing and analysis on the cloud may, on the other hand if no measures are in place, open the door for cyber attacks.

5/The central role of Context Information management and FIWARE

Back in 2011, the European Commission and the main players of the ICT Industry built a partnership to develop an open initiative targeted to create a sustainable ecosystem that will allow Europe and other regions who wish to join to capture the opportunities that will emerge with the next digital revolution. This resulted in the FIWARE initiative4 , which is built around four major pillars.

• The FIWARE Platform5

The FIWARE platform provides a rather simple yet powerful set of APIs (Application Programming Interfaces) that ease the development of Smart Applications in multiple sectors. It integrates Cloud, the Internet of Objects as well as technologies for Big Data processing and analysis based on a common standard for context information management. FIWARE is based upon elements (hereunder called Generic Enablers) that offer reusable and commonly shared functions serving a multiplicity of Usage Areas across various sectors. The specifications of FIWARE GE APIs are public and royalty-free. Besides, an open source reference implementation of FIWARE components as well as alternative implementations is publicly available in the so called FIWARE Catalogue6 , allowing multiple FIWARE providers to emerge faster in the market with a low-cost proposition.

• The FIWARE Lab7

The FIWARE Lab, launched on 6 September 2013, is a non-commercial sandbox environment where innovation and experimentation based on FIWARE technologies takes place. Entrepreneurs and individuals can use “hands on” the technology as well as test and showcase their applications on The FIWARE Lab, exploiting open data published by cities and other organizations. Several cities are already connected or are currently working on setting up a connection to the FIWARE Lab in order to export their open data in this environment. The FIWARE Lab is deployed over a geographically distributed nodes across Europe – with commercial nodes emerging now.

• The FIWARE Acceleration programme8

The FIWARE Acceleration programme promotes the take up of FIWARE technologies among solution integrators and application developers, with special focus on SMEs and start-ups. As part of this programme, the EU launched an ambitious campaign in September 2014 mobilizing 100M€ to support 1000 entrepreneurs,SMEs and startups to develop innovative applications based on FIWARE9 10.

• The FIWARE Mundus programme11

Despite born in Europe, FIWARE was designed with a global ambition. The FIWARE mundus programme is aiming at expanding FIWARE to other regions, engaging local ICT players as well as domain stakeholders and eventually liaising with local governments. As a first achievement, partners in several countries of Latin America (Mexico, Brazil, Chile) with support of their local government are embracing FIWARE, working on the setup of FIWARE Lab nodes in their countries and promoting FIWARE locally. Opportunities also clearly exist in other regions like North America, Asia and Africa.

• The FIWARE iHubs programme12

FIWARE was designed to be a global initiative but capable to be supported at local level. The network of FIWARE iHubs will play a fundamental role in building the community of adopters as well as contributors at local level.

In addition, with FIWARE NGSI, FIWARE has defined a pre-standard for context information management (an area where no standard has emerged yet although it is key for next generation smart applications in multiple sectors) and paved the way towards more interoperability and openness. In this line, the OASC (Open and Agile Smart Cities) initiative13 – which has been joined by 75 cities in 15 different countries across and beyond Europe in less than one year – has embraced the FIWARE NGSI standard for getting access to near real-time information about what is going on in cities. Adopting the same standard in Industry will be instrumental in connecting industry processes with data made available by cities and the other way around. Similar initiatives may likely emerge in sectors like Smart Agrifood. This is the kind multi-side market effects which will pave the way for creation of disruptive digital services.

Initially organized as a Public-Private Partnership (PPP) in order to stimulate the adoption of open standards , the access of data while also activating the necessary funds, FIWARE is now supported by an open FIWARE community backed by the strategic investment from the FIWARE Core Industry Group grouping two European Telecom operators: Orange and Telefonica, as well as two European IT Service Companies: Atos and Engineering. Together they have jointly addressed the market initially for Smart Cities and they will now also address the Industry sector at large: Manufacturing and Smart Agrifood in addition to Smart Cities. Those three domains have been prioritized because of a common need for an open source ecosystem that will foster collaboration between players and trigger value creation at marginal cost. FIWARE will be an instrumental enabler of the business acceleration.

The FIWARE Industry Group announced in Barcelona in 2015 that it will support the uptake of FIWARE technologies in the market through open source community which will drive the evolution of FIWARE API specifications and the development of open source reference implementations of those specifications.

The current FIWARE Industry group is seeking for the incorporation of new members who share the same vision and ambition and will announce in Barcelona in February 2016 the creation of a FIWARE Foundation to give a longer term perspective similar to the ones of Industrial Internet Consortium in the USA.

6/ The next Digital Revolution: An Opportunity for Europe

The replica of the Digital Revolution in the B-to-B world will be the major challenge for Industry in the next 5 years. Paradoxically, it will put the customer at the center of the B-to-B market, facilitating the production of customized products and services without impacting production efficiency. Even more significant for Europe, it will catalyze a concerted move to “on-shoring” in the manufacturing sector.

One of the most significant impacts will be the reduction in time to market cycles. Combining data from customer feedback, product operations and production processes together with efficient and open service platforms, the highest performing entrepreneurs and industry leaders will be able to respond to demands and constraints more quickly and efficiently. An environment supporting continuous innovation and customer focus is born.

For the Commission's Digitising European Industry initiative and notably its line of actions on platforms, this industry group suggests that FIWARE becomes the point of departure. This will accelerate the conversation across industry by remaining open on base technologies and rather quickly focus on real value added platform implementations within factories and across business value chains.

Forging ahead with approaches we know are proven is better than starting from scratch!

Europe must not miss the opportunity to be a key player in the establishing of connected collaboration platforms implementing context information management standards and enabling the new Economy of Data. Already on the worldwide stage we see the emergence of few large eco-system platforms centered on global industrial players e.g. GE in the USA and Siemens in Europe. We expect to have other US and European players, as well as large Japanese and Chinese players in this mix within 3 years.

A significant R&D effort is underway in Europe, but no mistake should be made about the order of magnitude of the necessary investments – these can only be justified by adopting the appropriate governance around few strong industrial alliances and the implementation of a platform that supports the applications necessary to bring the expected value to businesses and their customers.

Europe has the opportunity to leverage on the achievements of the FIWARE initiative, thereby generating the necessary scale, encouraging the creation of open ecosystems, fostering local innovation and digitising all sectors, in particular Industry.

The FIWARE Industry Group is recruiting relevant ICT players who can join Atos, Engineering, Orange and Telefonica in order to push the FIWARE initiative on the market and further develop the FIWARE platform as a cornerstone enabler for Digitizing the European Industry.

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